If you have a mortgage, it’s your responsibility to keep up with monthly payments. An unforeseen accident or loss of employment, however, could cause financial problems, making it difficult to stay on top of your mortgage. Once you start missing payments, you run the risk of foreclosure and losing your property. The following strategies will explain how to prevent foreclosure and preserve your investment.
Loan Reinstatement
Once you perceive you may have trouble keeping up with payments, notify your lender right away to discuss your options. If you’ve only missed one or two payments, your lender may give you time to bring payments up to date before filing a Notice of Default and beginning foreclosure proceedings. Try to work out a deal with your lender on how to proceed. If your lender isn’t cooperative, you can move on to another strategy.
Sell Property
Sell your home as quickly as possible. Talk to a realtor to evaluate its market value and see what you have to do to get a quick sale. When selling your home, make sure you get sufficient funds to cover your mortgage entirely, and more, if possible, to help you get back on your feet financially. Of all your options on how to prevent foreclosure, a quick sale of your home could benefit you most.
Short Sale
If the market value of your property is less than your mortgage, see if your lender will agree to a short sale. In a short sale, you can sell your house for less than your mortgage with the understanding that your lender will accept this amount in place of your loan. Many lenders prefer this option to undertaking the costly and time consuming process of foreclosure. A short sale will have less impact on your credit than a foreclosure.
Deed-in-Lieu of Foreclosure
Another option would be to deed the home back to your lender, giving him full possession in exchange for the remainder of your mortgage. Although this option cancels the foreclosure process, your credit still takes a negative blow.
Bankruptcy
Filing for bankruptcy will prevent your lender from foreclosing on your property. Working with an experienced bankruptcy lawyer will ensure documents are filed properly and you get the desired results. Bankruptcy will buy you much needed time to get back on track financially and work out a plan for paying your mortgage. Once you file for bankruptcy, your mortgage company is required by law to negotiate a repayment plan with you. As bankruptcy will have a devastating effect on your credit, you may want to make it your last option.
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